Leading crypto game Axie Infinity will boost its marketplace fee and institute a creator rewards program.
The game’s token-driven, play-to-earn economy has struggled in recent months.
Axie Infinity leads the blockchain gaming world, recently topping $4 billion in total NFT trading volume to date. But it’s also dealing with a declining play-to-earn economy that developer Sky Mavis is attempting to address, and this week’s announcement of a transaction fee hike isn’t sitting well with many players.
Sky Mavis revealed yesterday that Axie Infinity’s marketplace will bump the transaction fee from 4.25% to 5.25% beginning March 7. This will apply to all transactions on the Axie marketplace, which runs on Ronin, a custom sidechain scaling solution built on Ethereum.
Why raise the fee? Sky Mavis said it’s primarily to reward community members who drive new players to the game. The developer will institute a system that lets Axie players input a code from a certain content creator—such as a streamer or influencer—and that extra 1% will be paid to that creator.
It’s a system familiar to fans of other top online games like Fortnite and Roblox, both of which have a model that rewards content creators with a cut of digital currency sales when their special code is used. With millions of players and an avid online community, Axie Infinity will bring a version of that model into the Web3 gaming space.
For players who don’t input a creator code when shopping on the Axie marketplace, the entire 5.25% goes into the community treasury, which is used for an array of marketing and growth initiatives around Axie Infinity.
Axie’s struggles
The rate increase comes amid an economic crisis for Axie Infinity’s unique play-to-earn model, which rewards players with crypto tokens for playing the game, but requires an investment in potentially pricey NFT assets to play the game.
Axie Infinity surged last summer and has generated billions of dollars in NFT sales, juicing the value of the game’s AXS governance token and SLP reward token in the process. But trading volume has fallen dramatically over the last three months, with both tokens—especially SLP—dropping significantly from their respective price peaks.
Earlier this month, Sky Mavis announced a series of changes to the token rewards model to lessen the amount of SLP being issued on a daily basis, with more changes to come.
Axie Infinity’s various metrics saw a short-lived bump following the announcement, but SLP is still down 95% from its peak. Meanwhile, February was Axie’s worst month of NFT volume since May 2021, per data from CryptoSlam, with $82.5 million. That’s a more than 90% decline from Axie’s best month of trading volume last August—$848 million.
Sentiment around Axie is extremely poor and this is what they do
Axie ruined their own economy by not fixing it sooner. Axie is taking away free transactions slowly to force you to buy a new coin they own a ton of. Axie now increases the tax
Your governance token holds no power https://t.co/Ui74VSGgyu
Raising Axie’s marketplace transaction fee in the middle of an economic downturn has proved unpopular with many users, who spoke out on social media. Some players were upset with the idea of paying more to trade NFT items, especially given how those assets have recently dwindled in value.
Others thought that such a significant decision should have gone up to a community vote via the planned Axie Infinity DAO (decentralized autonomous organization). However, while the AXS token was designed for governance, the game has yet to implement a voting system.
“Sentiment around Axie is extremely poor and this is what they do,” tweeted someone who goes by the username Axie_Coach. “Axie ruined their own economy by not fixing it sooner. Axie is taking away free transactions slowly to force you to buy a new coin they own a ton of. Axie now increases the tax. Your governance token holds no power.”
I think we should have voted with our DAO for this???
Not everyone is down on the news, however. Brycent, a leading Axie and play-to-earn gaming streamer and Twitter Spaces host, tweeted, “This is the start of something new and creators earning 1% of marketplace transactions is a huge win.” However, he cautioned that the model could have negative effects, such as increased shilling.
View from the top
Axie Infinity co-founder and Sky Mavis Growth Lead Jeff Zirlin tweeted a thread defending the fee hike, writing that he believes it was the most sustainable option to support creators who drive value to the ecosystem. He also suggested that Axie’s marketplace fee was still less than many NFT collections that trade on leading Ethereum marketplace OpenSea, when factoring in all fees and royalties.
However, amid all of that, Zirlin also said that he believes that the marketplace fee should be set by the community when the functionality allows.
11/
The data below shows that 5.25% is well in-line for the NFT space. + the fee in most of these examples are going to the core developers/marketplace owners rather than the community.
Remember, the Community Treasury belongs to the Axie community. It belongs to all of us. pic.twitter.com/wzZcI50Isg
“As a final note, I think marketplace fee is a subject that should be determined by governance once that is enabled,” he wrote. “The marketplace fee can be adjusted again in the future, and as always, if we find a better solution and source of funds for this, we can adjust.”
Following complaints, Sky Mavis announced late yesterday afternoon that it “will be pushing out the formal launch” of the creator code program to gather feedback from the community. Quinn Campbell, the studio’s marketing lead, tweeted that Sky Mavis will share more information about its proposed plan beginning today, and will solicit feedback from players via Twitter Spaces.
While the structure of the creator code program might change, Campbell said the March 7 fee raise “will be part of all creator and community discussions over the next couple of weeks.”
In addition to working through recent economic challenges, Axie Infinity is in the midst of other structural and gameplay changes. The Ethereum-based game will soon implement free “starter Axies” that let new players try the game without first buying NFTs, and is also due to launch an overhauled battle mode ahead of eventually adding other land-based gameplay.
Despite the pushback, Axie’s AXS token is up 13% over the last 24 hours at a current price above $57, beating the nearly 6% increase in the total cryptocurrency market during that span, per data from CoinGecko. The SLP token is up almost 3% in the same timeframe.
